00 SENATE BILL NO. 129 01 "An Act establishing a 30-day deadline for the payment of contracts under the State 02 Procurement Code; establishing deadlines for the payment of grants, contracts, and 03 reimbursement agreements to nonprofit organizations, municipalities, and Alaska 04 Native organizations; relating to payment of grants to named recipients that are not 05 municipalities; and providing for an effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07  * Section 1. AS 36.30 is amended by adding a new section to read:  08 Sec. 36.30.970. Payment deadline and interest. (a) An agency shall pay a 09 contractor for satisfactory performance on a contract within 30 calendar days after the 10 agency receives a payment request from the contractor that complies with the contract. 11 (b) If a contractor is not paid as required by (a) of this section, the agency 12 shall pay interest on the unpaid amount of the required payment from the 31st calendar 13 day after the date the agency receives a payment request under (a) of this section at an 01 interest rate that is equal to the rate set out in AS 45.45.010(a). 02 (c) If an agency withholds payment because of unsatisfactory performance or 03 if the payment request made under (a) of this section does not comply with the 04 requirements of the contract, within eight working days after receipt of the payment 05 request the agency shall notify the contractor in writing stating specifically why 06 payment is being withheld and what remedial actions may be taken by the contractor 07 to receive the full payment. 08 (d) If the notification by the agency required by (c) of this section does not 09 comply with (c) of this section, the agency shall pay interest on the withheld amount 10 from the eighth working day after receipt of the initial payment request until the 11 agency provides notice that does comply with (c) of this section. 12 (e) If payment is withheld under (c) of this section, the agency shall pay the 13 withheld amount within 21 calendar days after the contractor satisfactorily completes 14 the remedial actions identified in the notice. If the withheld amount is not paid within 15 the 21 calendar days, the agency shall pay interest on the withheld amount from the 16 21st calendar day at an interest rate that is equal to the rate set out in AS 45.45.010(a). 17 (f) The obligation to pay interest under this section does not apply to 18 retainage. 19 (g) This section does not apply to a public construction or public works 20 contract subject to AS 36.90.200 or an agreement subject to AS 36.90.310. 21 (h) In this section, "contractor" means a person who has been awarded a 22 contract with an agency. 23  * Sec. 2. AS 36.90 is amended by adding a new section to article 4 to read: 24 Sec. 36.90.310. Payment deadline and interest for grants and  25 reimbursement agreements to nonprofit organizations, municipalities, and  26 Alaska Native organizations. (a) An agency shall pay a nonprofit organization, 27 municipality, or Alaska Native organization for satisfactory performance of a grant or 28 reimbursement agreement within 30 calendar days after the agency receives a payment 29 request from the nonprofit organization, municipality, or Alaska Native organization 30 that complies with the grant or reimbursement agreement. If the agency uses federal 31 funds to pay the grant or reimbursement agreement, the agency shall pay for 01 satisfactory performance within 21 calendar days after the agency receives a payment 02 request that complies with the grant or reimbursement agreement, or within 21 03 calendar days after the agency receives the federal funds, whichever is later. 04 (b) If a nonprofit organization, municipality, or Alaska Native organization is 05 not paid as required by (a) of this section, the agency shall pay interest on the unpaid 06 amount of the required payment at an interest rate that is equal to the rate set out in 07 AS 45.45.010(a) from 08 (1) the 21st calendar day after the date the agency receives a payment 09 request under (a) of this section if the agency uses federal funds to make the payment; 10 (2) the 30th calendar day after the date the agency receives a payment 11 request under (a) of this section for all other payments for grants and reimbursement 12 agreements. 13 (c) If an agency withholds payment because of unsatisfactory performance or 14 if the payment request made under (a) of this section does not comply with the 15 requirements of the grant or reimbursement agreement, within eight working days 16 after receipt of the payment request the agency shall notify the nonprofit organization, 17 municipality, or Alaska Native organization in writing stating specifically why the 18 payment is being withheld and what remedial actions may be taken by the nonprofit 19 organization, municipality, or Alaska Native organization to receive the full payment. 20 (d) If the notification by the agency required by (c) of this section does not 21 comply with (c) of this section, the agency shall pay interest on the withheld amount 22 from the eighth working day after receipt of the initial payment request until the 23 agency provides notice that does comply with (c) of this section. 24 (e) If payment is withheld under (c) of this section, the agency shall pay the 25 withheld amount within 21 calendar days after the nonprofit organization, 26 municipality, or Alaska Native organization satisfactorily completes the remedial 27 actions identified in the notice. If the withheld amount is not paid within the 21 28 calendar days, the agency shall pay interest on the withheld amount from the 21st 29 calendar day at an interest rate that is equal to the rate set out in AS 45.45.010(a). 30 (f) In this section, 31 (1) "agency" has the meaning given in AS 36.30.990; 01 (2) "Alaska Native organization" has the meaning given in 02 AS 18.66.020(d); 03 (3) "grant" means a legal instrument of financial assistance between an 04 agency and a nonstate entity that is used to enter into a relationship for which the 05 principal purpose is to transfer anything of value from an agency to the recipient to 06 carry out a public purpose authorized by law; "grant" does not include 07 (A) a cooperative agreement that provides for substantial 08 involvement between the agency and the recipient in carrying out the activity 09 contemplated by the award; 10 (B) a legal instrument used by an agency to acquire property or 11 services for the direct benefit of an agency; 12 (C) cash assistance to an individual; 13 (D) a subsidy; 14 (E) a loan; 15 (F) a loan guarantee; 16 (G) insurance; 17 (H) state funding that is required annually and is calculated 18 through a formula set in statute; 19 (I) a permanent fund dividend; or 20 (J) a grant appropriated to a municipality under AS 37.05.315 21 or a named recipient under AS 37.05.316; 22 (4) "nonprofit organization" has the meaning given in 23 AS 38.05.097(c). 24  * Sec. 3. AS 37.05.316 is amended by adding a new subsection to read: 25 (d) Not less than 20 percent of a grant under this section for a named recipient 26 that is not a municipality must be paid to the named recipient within 10 days after the 27 effective date of the grant agreement. The remainder of the grant must be paid either 28 in monthly installments equal to the amount of grant money the named recipient 29 expended in the previous month or in a lump sum as determined by the Department of 30 Commerce, Community, and Economic Development. 31  * Sec. 4. This Act takes effect immediately under AS 01.10.070(c).